Question 1

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Accepted Answer

A) True 
 B)False

Question 2

The auditors are using mean-per-unit sampling to evaluate the reasonableness of the book value of the accounts receivable of Smith,Inc.Smith has 10,000 receivable accounts with a total book value of $800,000.The auditors estimate the population's standard deviation as being equal to $25.After examining the overall audit plan,the auditors believe that the account's tolerable misstatement is $40,000,and that a risk of incorrect rejection of .10 (risk coefficient = 1.64)and a risk of incorrect acceptance of .15 (risk coefficient = 1.04)should be used.
Required:
a.Calculate the required sample size.
Now ignore your sample size calculation in part "a," and assume that your answer was a sample size of 289 (the square root of 289 is 17)and that you obtained the following results:
Average audited value of items in sample: $76
Average book value of items in sample: $78
Standard Deviation in the sample (audited values): $24
Standard Deviation in the sample (book values): $26
b.Using mean-per-unit sampling,calculate the projected misstatement for the population.
c.Using mean-per-unit sampling,calculate the adjusted allowance for sampling risk and use it to form a statistical conclusion concerning the book value of the population ($800,000).That is,calculate an interval and either "accept" or "reject" the client's book value.

Accepted Answer

a.The required sample size is calculated

Question 3

Which of the following is an advantage of systematic selection over random number selection?

Accepted Answer

A) It provides a stronger basis for statistical conclusions. 
B) It enables the auditor to use the more efficient "sampling with replacement" tables. 
C) There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. 
D) It does not require establishment of correspondence between random numbers and items in the population. 
A) It provides a stronger basis for statistical conclusions. 
B) It enables the auditor to use the more efficient "sampling with replacement" tables. 
C) There may be correlation between the location of items in the population, the feature of sampling interest, and the sampling interval. 
D) It does not require establishment of correspondence between random numbers and items in the population.

Question 4

The 4000 accounts receivable of GHI Company have a total book value of $60,000.Bob Smith,CPA,has selected and audited a sample of 100 accounts with a total book value of $1,600.Using the mean-per-unit estimation technique,Smith has properly estimated a projected misstatement of a $8,000 overstatement for the entire population.The audited value of Smith's sample is:

Accepted Answer

A) $1,300 
B) $1,400 
C) $1,600 
D) $1,800 
A) $1,300 
B) $1,400 
C) $1,600 
D) $1,800

Question 5

Using ratio estimation,an auditor has taken a sample of 200 from a population's 40,000 items; that population has a book value of $200,000.She found that in her sample the average audited value was $4.20,while the average book value was $5.20.What is the estimated total audited value of the population?

Accepted Answer

A) $160,000. 
B) $161,538. 
C) $168,000. 
D) $200,000. 
A) $160,000. 
B) $161,538. 
C) $168,000. 
D) $200,000.

Question 6

Audit sampling is used in conjunction with many audit tests,and may be performed on a statistical or nonstatistical basis.
a.Define the term audit sampling.
b.List and explain two advantages of the use of statistical sampling as compared to nonstatistical sampling.

Accepted Answer

a.Audit sampling is performing a test on

Question 7

If all other factors specified in an attributes sampling plan remain constant,changing the specified tolerable rate from 6% to 10%,and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

Accepted Answer

A) Increase. 
B) Remain the same. 
C) Decrease. 
D) Change by 4%. 
A) Increase. 
B) Remain the same. 
C) Decrease. 
D) Change by 4%.

Question 8

The auditor using nonstatistical attributes sampling,but who nevertheless has chosen the sample in conformity with random selection procedures:

Accepted Answer

A) Need not consider the risk of assessing control risk too low. 
B) Has committed a nonsampling error. 
C) Will have to use discovery sampling techniques to evaluate the results. 
D) Should compare the deviation rate of the sample to the tolerable rate. 
A) Need not consider the risk of assessing control risk too low. 
B) Has committed a nonsampling error. 
C) Will have to use discovery sampling techniques to evaluate the results. 
D) Should compare the deviation rate of the sample to the tolerable rate.

Question 9

Using the mean-per-unit estimation method an auditor has properly calculated the estimated total audited value of a population as $200,000.Her sample included 200 of the population's 40,000 items.She found that,in her sample the average audited value was $1 less than the average book value.What was the average audited value in the sample?

Accepted Answer

A) $4. 
B) $5. 
C) $6. 
D) $10. 
A) $4. 
B) $5. 
C) $6. 
D) $10.

Question 10

The 2000 accounts receivable of ABC Company have a total book value of $40,000.Bob Rotter,CPA,has selected and audited a sample of 100 accounts with a total book value of $1,950.The audited value of the 100 accounts in the sample is $1,875. Using the mean-per-unit estimation technique,Rotter's estimate (to the nearest dollar)of year-end accounts receivable balance would be:

Accepted Answer

A) $37,500 
B) $38,462 
C) $38,500 
D) $41,600 
A) $37,500 
B) $38,462 
C) $38,500 
D) $41,600

Question 11

Increases in the planned allowance for sampling risk have what effect on required sample size?

Accepted Answer

A) Increases. 
B) Decreases. 
C) No effect. 
D) Indeterminate. 
A) Increases. 
B) Decreases. 
C) No effect. 
D) Indeterminate.

Question 12

Which of the following situations will result in the auditors concluding that the risk of material misstatement is too high when using nonstatistical sampling for substantive tests?

Accepted Answer

A) The projected misstatement exceeds the tolerable misstatement. 
B) The allowance for sampling risk exceeds the projected misstatement. 
C) The risk of incorrect acceptance exceeds the risk of incorrect rejection. 
D) The tolerable misstatement exceeds the sample net misstatement. 
A) The projected misstatement exceeds the tolerable misstatement. 
B) The allowance for sampling risk exceeds the projected misstatement. 
C) The risk of incorrect acceptance exceeds the risk of incorrect rejection. 
D) The tolerable misstatement exceeds the sample net misstatement.

Question 13

An important statistic to consider when using a statistical sampling audit plan is the population variability.The population variability is measured by the:

Accepted Answer

A) Sample mean. 
B) Standard deviation. 
C) Standard error of the sample mean. 
D) Estimated population total minus the actual population total. 
A) Sample mean. 
B) Standard deviation. 
C) Standard error of the sample mean. 
D) Estimated population total minus the actual population total.

Question 14

The mean book value of the items included in a mean-per-unit sample is not directly used in the evaluation of sample results.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

Accepted Answer

A) When the projected misstatement exceeds the tolerable misstatement, the auditor should conclude that the population is not misstated. 
B) The closer the projected misstatement is to the tolerable misstatement, the higher the risk of material misstatement. 
C) When the projected misstatement is equal to zero, the auditors may conclude with certainty that no misstatements exist in the account. 
D) When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated. 
A) When the projected misstatement exceeds the tolerable misstatement, the auditor should conclude that the population is not misstated. 
B) The closer the projected misstatement is to the tolerable misstatement, the higher the risk of material misstatement. 
C) When the projected misstatement is equal to zero, the auditors may conclude with certainty that no misstatements exist in the account. 
D) When the projected misstatement percentage exceeds the risk of incorrect acceptance the auditors will generally conclude that the population is materially misstated.

Question 16

If the projected misstatement in a nonstatistical sampling is $8,000,while the tolerable misstatement is $9,000,what would an auditor likely conclude?

Accepted Answer

A) Since the projected misstatement is less than the tolerable misstatement, the account is not misstated. 
B) Since the projected misstatement is less than the tolerable misstatement, the account is misstated. 
C) The risk is high that the account is materially misstated. 
D) The analysis has been improperly performed since the projected misstatement is unequal to the tolerable misstatement. 
A) Since the projected misstatement is less than the tolerable misstatement, the account is not misstated. 
B) Since the projected misstatement is less than the tolerable misstatement, the account is misstated. 
C) The risk is high that the account is materially misstated. 
D) The analysis has been improperly performed since the projected misstatement is unequal to the tolerable misstatement.

Question 17

The 3000 accounts receivable of DEF Company have a total book value of $60,000.Bob Smith,CPA,has selected and audited a sample of 100 accounts with a total book value of $2,100.Using the difference estimation technique,Smith has properly estimated a projected misstatement of a $9,000 overstatement for the entire population.The estimated total audited value of the population is:

Accepted Answer

A) $51,000 
B) $58,000 
C) $60,000 
D) $69,000 
A) $51,000 
B) $58,000 
C) $60,000 
D) $69,000

Question 18

When the auditors have chosen to test a control,what relationship will the tolerable rate normally have when compared to the expected rate of deviations in the sample?

Accepted Answer

A) Exceed. 
B) Equal. 
C) Be less than. 
D) Indefinite. 
A) Exceed. 
B) Equal. 
C) Be less than. 
D) Indefinite.

Question 19

The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the mean-per-unit estimation technique,the estimated total audited value of the population is:

Accepted Answer

A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000. 
A) $100,000. 
B) $120,000. 
C) $140,000. 
D) $144,000.

Question 20

When using statistical sampling,which of the following need not be known to evaluate the results of an attributes sample?

Accepted Answer

A) Sample size. 
B) Risk of assessing control risk too low. 
C) Number of deviations in the population. 
D) Number of deviations found in the sample. 
A) Sample size. 
B) Risk of assessing control risk too low. 
C) Number of deviations in the population. 
D) Number of deviations found in the sample.

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Which of the following is an advantage of systematic selection over random number selection?

Audit sampling is used in conjunction with many audit tests,and may be performed on a statistical or nonstatistical basis. a.Define the term audit sampling. b.List and explain two advantages of the use of statistical sampling as compared to nonstatistical sampling.

If all other factors specified in an attributes sampling plan remain constant,changing the specified tolerable rate from 6% to 10%,and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

The auditor using nonstatistical attributes sampling,but who nevertheless has chosen the sample in conformity with random selection procedures:

Increases in the planned allowance for sampling risk have what effect on required sample size?

Which of the following situations will result in the auditors concluding that the risk of material misstatement is too high when using nonstatistical sampling for substantive tests?

An important statistic to consider when using a statistical sampling audit plan is the population variability.The population variability is measured by the:

The mean book value of the items included in a mean-per-unit sample is not directly used in the evaluation of sample results.

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

If the projected misstatement in a nonstatistical sampling is $8,000,while the tolerable misstatement is $9,000,what would an auditor likely conclude?

When the auditors have chosen to test a control,what relationship will the tolerable rate normally have when compared to the expected rate of deviations in the sample?

When using statistical sampling,which of the following need not be known to evaluate the results of an attributes sample?

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

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Exam 9: Audit Sampling

Auditors project the misstatements found in the sample to the population when using statistical sampling,but not when using nonstatistical sampling.

Which of the following is an advantage of systematic selection over random number selection?

Audit sampling is used in conjunction with many audit tests,and may be performed on a statistical or nonstatistical basis. a.Define the term audit sampling. b.List and explain two advantages of the use of statistical sampling as compared to nonstatistical sampling.

If all other factors specified in an attributes sampling plan remain constant,changing the specified tolerable rate from 6% to 10%,and changing the specified risk of assessing control risk too low from 3% to 7% would cause the required sample size to:

The auditor using nonstatistical attributes sampling,but who nevertheless has chosen the sample in conformity with random selection procedures:

Increases in the planned allowance for sampling risk have what effect on required sample size?

Which of the following situations will result in the auditors concluding that the risk of material misstatement is too high when using nonstatistical sampling for substantive tests?

An important statistic to consider when using a statistical sampling audit plan is the population variability.The population variability is measured by the:

The mean book value of the items included in a mean-per-unit sample is not directly used in the evaluation of sample results.

Which of the following is a correct statement with respect to evaluating results when using nonstatistical sampling for substantive tests?

If the projected misstatement in a nonstatistical sampling is $8,000,while the tolerable misstatement is $9,000,what would an auditor likely conclude?

When the auditors have chosen to test a control,what relationship will the tolerable rate normally have when compared to the expected rate of deviations in the sample?

When using statistical sampling,which of the following need not be known to evaluate the results of an attributes sample?

The Role of the Public Accountant in the American Economy

Professional Standards

Professional Ethics

Legal Liability of CPAS

Audit Evidence and Documentation

Audit Planning, understanding the Client, assessing Risks, and Responding

Internal Control

Consideration of Internal Control in an Information Technology Environment

Cash and Financial Investments

Accounts Receivable, Notes Receivable, and Revenue

Inventories and Cost of Goods Sold

Property Plant and Equipment: Depreciation and Depletion

Accounts Payable and Other Liabilities

Debt and Equity Capital

Auditing Operations and Completing the Audit

Auditors Report

Integrated Audits of Public Companies

Additional Assurance Services: Historical Financial Information

Additional Assurance Services: Other Information

Internal, Operational, and Compliance Auditing

Probability-Proportion-To-Size Sampling

Filters